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How Climate Change Undermines Net Zero Targets
Climate change and energy are deeply interconnected global challenges. As the world transitions to renewable energy to reduce greenhouse gas emissions and slow rising temperatures, we often overlook how climate change is already affecting critical energy infrastructure. This oversight leaves energy investments and security vulnerable to increasingly erratic weather patterns.
Ahead of COP29, the International Energy Agency writes that a “new energy system needs to be built to last: this means prioritising security, resilience and flexibility, and ensuring that the benefits of the new energy economy are shared.” In 2023, extreme droughts globally led to a significant decrease in hydropower output, particularly in China and North America. This shortfall in hydropower accounted for over 40% of the emissions increase recorded year on year as countries relied more heavily on fossil fuels to compensate.
According to the 2022 World Economic Forum Global Risks Perception Survey, 'climate action failure' was identified as the top risk for its severe impact in the next decade. If we fail to build resilient infrastructure, the consequences for governments and communities could be catastrophic as extreme weather events grow in frequency and intensity. The Asian Development Bank (ADB) highlights that 40% of Southeast Asia's energy and transport assets are highly exposed to climate risks and natural hazards.
The global energy transition presents an opportunity not only to tackle the causes of climate change but also to build resilience into our energy systems. The next three decades will see rapid changes as we decarbonise energy systems, which will require significant global investment. This presents a chance to prepare for climate impacts and diversify energy sources, making them more resilient.
Challenges in the Energy Transition
The push to expand renewable energy and phase out fossil fuels brings new challenges to electricity systems. Without effective action, the energy sector faces the following risks:
- Higher Temperatures: Rising temperatures reduce power generation efficiency, increase cooling demands, and place strain on generation and grid capacity.
- Extreme Weather Events: More frequent and severe storms can damage infrastructure, disrupt fuel supply, and threaten energy security.
- Variability of Renewables: Fluctuations in cloud cover or wind speeds can destabilise grids dependent on renewable energy, while long-term climate changes can impact the viability of renewable sources.
- Rising Sea Levels: Coastal energy infrastructure is vulnerable, and rising sea levels limit suitable locations for future plants and grids.
- Community Impacts: Disasters like floods and fires can lead to power outages, affecting services reliant on consistent electricity.
To make energy systems more resilient, governments and regulators need to ensure that climate change considerations are embedded in scenario analysis, investment modelling, and decision-making.
Achieving Resilience Through Partnerships
In Laos, the government recognises the risks that climate change pose to its energy sector, especially given its reliance on hydropower which can cause generation reliability issues during the dry season. Through the Laos-Australia Sustainable Energy Partnership (LASEP), Australia is supporting Laos in its energy transition by sharing experience, and technology that has been critical in Australia’s own energy journey. While Laos plans to expand hydropower, it is also focusing on diversifying its energy sources, particularly solar and wind, to enhance resilience during the dry season when hydropower output is low.
Currently, solar and wind energy play a minor role in Laos, representing a significant opportunity for growth. Australia is sharing its expertise in renewables deployment, incentives, and grid integration to help diversify the energy mix in line with Laos’ policy goals. For example, Partnerships for Infrastructure (P4I) is scoping pumped hydro energy storage sites, leveraging Australia’s experience in this area. There is also potential to collaborate on expanding rooftop solar in the future.
In preparation for a greater share of renewable energy in its power grid, Australia is supporting Laos PDR in analysing the potential of Pumped Hydro Energy Storage (PHES). PHES is a technology designed to stabilise the grid by storing excess energy, which can then be released when supply dips (sun not shining, wind not blowing), helping to counterbalance the variability of resources like solar and wind.
Laos is also reforming its energy sector, updating laws and establishing new institutions, including a new energy regulator and processes to support independent power producers. This institutional shift provides opportunities to embed climate resilience, drawing from the Australian Energy Regulator’s work.
Furthermore, Laos is working on a national hydrogen strategy, improving climate projections for the energy sector, and strengthening grid infrastructure resilience. These initiatives align with Australia’s shared goals, research strengths, and technical expertise, drawing on expertise from CSIRO and other Australian institutions.
